More and more often, credit managers are hearing about
a concept called Alternative Dispute Resolution. Alternative Dispute
Resolution [ADR] is not a new idea. ADR involves the use of specific
methods and tools for resolving problems between two parties [such
as a buyer and seller] without the necessity of one party suing the
other in Court.
There are several advantages of ADR over civil litigation including:
The most common forms of ADR are  Mediation and  Arbitration.
Mediation is a dispute resolution technique in which a neutral third
party tries to negotiate a resolution to a dispute between two parties.
The mediator does not have the authority to impose his or her decision
about the merits of the case on the parties. A mediator does not issue
a finding of fact.
There are two fundamentally different types of arbitration. There is binding
arbitration, and there is non-binding arbitration. An arbitration hearing is
something like a trial. The arbitrator [or arbitrators] will review written
evidence and hear from witnesses. Witnesses can be cross-examined. After the
hearing, the arbitrator[s] will issue a finding or an award. If the parties
submit to binding arbitration, the disputing parties are bound by the decision
of the arbitrator[s]. In non-binding arbitration, the parties can agree to
accept the decision, or they can continue to pursue their respective positions
by filing a lawsuit.
In a dispute between a buyer and seller, the seller usually wants to try to
preserve the possibility of doing business again with the customer in the future.
This is highly unlikely of the creditor sues the debtor or places the account
for collection, but it is possible IF the dispute is submitted to mediation